Polycom (PLCM) 8-K Results of Operations and Financial Condition

Exhibit 99.1

Investor Contact:	Laura Graves
	Polycom, Inc.
	1.408.586.4271
	laura.graves@polycom.com
Press Contact:	Cameron Craig
	Polycom, Inc.
	1.408.586.3776
	cameron.craig@polycom.com

Polycom Announces Financial Results for Second Quarter 2016

SAN JOSE, Calif. – July 21, 2016 – Polycom, Inc. (Nasdaq: PLCM) today reported second quarter 2016 revenues of $288 million. On a GAAP basis, Polycom reported a net loss of $10 million, or 7 cents per share for the second quarter 2016. On a non-GAAP basis, Polycom reported net income of $29 million and earnings of 21 cents per diluted share. Polycom’s quarterly reconciliation of GAAP to non-GAAP performance is provided in the tables at the end of this press release.

“Polycom delivered solid operating performance despite a more challenging top line,” said Peter Leav, President and Chief Executive Officer. “Asia Pacific posted strong sequential growth, driven by higher revenues in China and Australia.”

($ in millions, except per share data)	Q2 2016
Revenues	$	287.8
GAAP gross profit margin		56.0	%
GAAP operating expenses	$	162.7
GAAP operating margin		(0.5	)%
GAAP EPS	$	(0.07	)
Non-GAAP gross profit margin		57.4	%
Non-GAAP operating expenses	$	128.7
Non-GAAP operating margin		12.7	%
Non-GAAP EPS	$	0.21

“Polycom continued to exhibit sound financial management,” said Laura Durr, Chief Financial Officer. “We continue to generate positive operating cash flow and ended the quarter with $722 million in cash and investments.”

On a comparative basis, consolidated financial results were:

($ in millions, except per share data)	Q2 2016			Q1 2016		Q2 2015		Quarter-Over-Quarter Change			Year-Over-Year Change
Revenues	$	287.8		$	290.1	$	316.6		(1	)%		(9	)%
GAAP net (loss) income	$	(10.0	)	$	3.3	$	19.6		(403	)%		(151	)%
GAAP EPS	$	(0.07	)	$	0.02	$	0.14		(450	)%		(150	)%
Non-GAAP net income	$	29.4		$	25.7	$	29.9		14	%		(2	)%
Non-GAAP EPS	$	0.21		$	0.19	$	0.22		11	%		(5	)%

The Americas declined both sequentially and year-over-year.  Sequential and year-over-year results for EMEA were primarily impacted by foreign exchange. Asia Pacific grew sequentially as a result of growth in China and Australia, but was down on a year-over-year basis.

In terms of product category results, UC Group revenues declined sequentially and year-over-year, primarily as a result of lower UC Group revenues in the Americas and EMEA regions. UC Personal revenue increased sequentially and year-over-year. UC Platform revenue grew sequentially as a result of China, which had higher overall revenue this quarter.

On a geographic basis, consolidated revenues were comprised of:

($ in millions)	Q2 2016			Q1 2016			Q2 2015			Quarter-Over-Quarter Change			Year-Over-Year Change
Americas	$	142.0		$	155.5		$	158.3			(9	)%		(10	)%
% of total revenues		49	%		54	%		50	%
Europe, Middle East & Africa    (EMEA)		72.7			73.5			80.9			(1	)%		(10	)%
% of total revenues		25	%		25	%		26	%
Asia Pacific		73.1			61.1			77.4			20	%		(6	)%
% of total revenues		26	%		21	%		24	%
Totals *	$	287.8		$	290.1		$	316.6			(1	)%		(9	)%

* may not foot due to rounding

By product category, inclusive of its service component, consolidated revenues were comprised of:

($ in millions)	Q2 2016			Q1 2016			Q2 2015			Quarter-Over-Quarter Change			Year-Over-Year Change
UC Group Systems	$	171.4		$	178.9		$	195.2			(4	)%		(12	)%
% of total revenues		60	%		62	%		62	%
UC Personal Devices		68.8			67.8			66.8			1	%		3	%
% of total revenues		24	%		23	%		21	%
UC Platform		47.6			43.4			54.6			10	%		(13	)%
% of total revenues		16	%		15	%		17	%
Totals *	$	287.8		$	290.1		$	316.6			(1	)%		(9	)%

* may not foot due to rounding

In the second quarter of 2016, Polycom generated a total of $19 million in operating cash flow. Cash and investments at the end of the second quarter of 2016 totaled $722 million, of which approximately $297 million is located in the United States. Net of existing debt, cash and investments at the end of the second quarter of 2016 totaled $490 million.

Forward Looking Statements and Risk Factors

This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding future profitability and operating cash flow. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the impact on our business of the recent announcement regarding the proposed acquisition of Polycom by entities affiliated with Siris Capital Group, LLC, the impact of competition on our product sales and on our customers and partners, and any resulting loss of business; the impact of increased competition due to consolidation in our industry or competition from companies that are larger or that have greater resources than we do; potential fluctuations in results and future growth rates; risks associated with global economic conditions and external market factors; the market acceptance of our products and changing market demands, including demands for differing technologies or product and services offerings; our ability to successfully implement process improvements and cost containment initiatives; changes to our strategic areas of focus and investment; our ability to successfully integrate our acquisitions into our business; possible delays in the development, availability and shipment of new products due to engineering, manufacturing or other delays; increasing costs and the availability of capital; changes in key sales and other personnel that may cause disruption to the business; the impact of restructuring actions; and the impact of global conflicts that may adversely impact our business. Many of these risks and uncertainties are discussed in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.

GAAP to non-GAAP Reconciliation

To supplement our consolidated financial statements presented on a GAAP basis, Polycom uses non-GAAP measures of operating results, net (loss) income and (loss) income per share, which are adjusted to exclude certain costs, expenses, gains and losses we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Polycom’s underlying operational results and trends and our marketplace performance. The non-GAAP results are an indication of our baseline performance before gains, losses, or other charges that are considered by management to be outside of our core operating results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net (loss) income or diluted net (loss) income per share prepared in accordance with GAAP in the United States.

About Polycom

Polycom helps organizations unleash the power of human collaboration. More than 400,000 companies and institutions worldwide defy distance with secure video, voice and content solutions from Polycom to increase productivity, speed time to market, provide better customer service, expand education and save lives. Polycom and its global partner ecosystem provide flexible collaboration solutions for any environment that deliver the best user experience, the broadest multi-vendor interoperability and unmatched investment protection. Visit www.polycom.com or connect with us on Twitter, Facebook and LinkedIn to learn more.

© 2016 Polycom, Inc. All rights reserved. POLYCOM^®, the Polycom logo, and the names and marks associated with Polycom’s products are trademarks and/or service marks of Polycom, Inc. and are registered and/or common law marks in the United States and various other countries. All other trademarks are property of their respective owners.

POLYCOM, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Revenues:
Product revenues	$	201,715		$	221,896		$	404,975		$	455,583
Service revenues		86,064			94,679			172,879			191,692
Total revenues		287,779			316,575			577,854			647,275
Cost of revenues:
Cost of product revenues		94,029			95,752			189,084			197,021
Cost of service revenues		32,478			34,898			63,669			71,509
Total cost of revenues		126,507			130,650			252,753			268,530
Gross profit		161,272			185,925			325,101			378,745
Operating expenses:
Sales and marketing		82,505			89,433			161,968			180,292
Research and development		43,981			46,545			87,051			95,882
General and administrative		20,291			22,269			40,401			43,436
Amortization of purchased intangibles		2,017			2,417			4,217			4,834
Restructuring costs		6,007			343			13,509			367
Transaction-related costs		7,887			—			12,131			—
Total operating expenses		162,688			161,007			319,277			324,811
Operating (loss) income		(1,416	)		24,918			5,824			53,934
Interest and other income (expense), net
Interest expense		(1,668	)		(1,523	)		(3,305	)		(3,007	)
Other income (expense), net		1,966			1,345			2,835			1,367
Interest and other income (expense), net		298			(178	)		(470	)		(1,640	)
(Loss) income before provision for income taxes		(1,118	)		24,740			5,354			52,294
Provision for income taxes		8,879			5,093			12,016			11,449
Net (loss) income	$	(9,997	)	$	19,647		$	(6,662	)	$	40,845
Basic net (loss) income per share	$	(0.07	)	$	0.15		$	(0.05	)	$	0.30
Diluted net (loss) income per share	$	(0.07	)	$	0.14		$	(0.05	)	$	0.30
Number of shares used in computation of net (loss) income per    share:
Basic		135,700			134,057			134,934			134,417
Diluted		135,700			137,347			134,934			138,290

 Note: As a result of the GAAP net loss in some of the periods presented, all potentially issuable common shares for those periods have been excluded from the diluted shares used in the computation of GAAP earnings per share as their effect is anti-dilutive.

POLYCOM, INC.

Reconciliation of GAAP to Non-GAAP Net (Loss) Income

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended									Six Months Ended
	June30, 2016			March 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015
GAAP net (loss) income	$	(9,997	)	$	3,335		$	19,647		$	(6,662	)	$	40,845
Amortization of purchased intangibles		2,117			2,300			2,517			4,417			5,591
Restructuring costs		6,007			7,502			343			13,509			367
Transaction-related costs		7,887			4,244			—			12,131			—
Stock-based compensation expense		21,606			11,480			9,711			33,087			18,943
Effect of stock-based compensation on warranty rates		235			106			80			341			133
Costs associated with CEO separation and related SEC    investigation		—			—			64			—			399
Income tax effect of non-GAAP exclusions		1,532			(3,283	)		(2,415	)		(1,752	)		(4,096	)
Non-GAAP net income	$	29,387		$	25,684		$	29,947		$	55,071		$	62,182
GAAP net (loss) income per share:
Basic	$	(0.07	)	$	0.02		$	0.15		$	(0.05	)	$	0.30
Diluted	$	(0.07	)	$	0.02		$	0.14		$	(0.05	)	$	0.30
Non-GAAP net income per share:
Basic	$	0.22		$	0.19		$	0.22		$	0.41		$	0.46
Diluted	$	0.21		$	0.19		$	0.22		$	0.40		$	0.45
Number of shares used in computation of GAAP net (loss)    income per share:
Basic		135,700			134,168			134,057			134,934			134,417
Diluted		135,700			137,292			137,347			134,934			138,290
Number of shares used in computation of non-GAAP net    income per share:
Basic		135,700			134,168			134,057			134,934			134,417
Diluted		138,012			137,292			137,347			137,652			138,290

Note: As a result of the GAAP net loss in some of the periods presented, all potentially issuable common shares for those periods have been excluded from the diluted shares used in the computation of GAAP earnings per share as their effect is anti-dilutive.

POLYCOM, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

	June 30, 2016		December 31, 2015
ASSETS
Current assets
Cash and cash equivalents	$	576,516	$	435,093
Short-term investments		126,238		184,242
Trade receivables, net		154,212		187,888
Inventories		96,748		89,392
Prepaid expenses and other current assets		50,118		52,852
Total current assets		1,003,832		949,467
Property and equipment, net		93,123		101,853
Long-term investments		18,788		46,484
Goodwill and purchased intangibles, net		568,307		572,840
Deferred taxes		86,659		89,865
Other assets		20,994		21,738
Total assets	$	1,791,703	$	1,782,247
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	78,444	$	73,472
Accrued payroll and related liabilities		32,977		38,781
Taxes payable		2,130		4,342
Deferred revenue		174,119		170,559
Current portion of long-term debt		5,717		5,717
Other accrued liabilities		74,607		85,095
Total current liabilities		367,994		377,966
Long-term deferred revenue		83,272		86,191
Taxes payable		10,382		9,983
Deferred taxes		—		135
Long-term debt		225,940		228,799
Other non-current liabilities		24,074		25,964
Total liabilities		711,662		729,038
Stockholders' equity		1,080,041		1,053,209
Total liabilities and stockholders' equity	$	1,791,703	$	1,782,247

POLYCOM, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended
	June 30, 2016			June 30, 2015
Cash flows from operating activities:
Net (loss) income	$	(6,662	)	$	40,845
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		23,663			27,210
Amortization of purchased intangibles		4,417			5,629
Amortization of capitalized software development costs for products to be sold		2,140			1,354
Amortization of debt issuance costs		267			266
Amortization of discounts and premiums on investments, net		645			1,090
Write-down of excess and obsolete inventories		5,477			6,810
Stock-based compensation expense		33,087			18,943
Excess tax benefits from stock-based compensation expense		(1,405	)		(3,487	)
Loss on disposal of property and equipment		175			544
Changes in assets and liabilities:
Trade receivables		33,601			8,245
Inventories		(12,880	)		(6,791	)
Deferred taxes		(4,435	)		(2,744	)
Prepaid expenses and other assets		2,362			4,960
Accounts payable		4,058			(19,229	)
Taxes payable		5,296			9,663
Other accrued liabilities and deferred revenue		(17,540	)		(30,160	)
Net cash provided by operating activities		72,266			63,148
Cash flows from investing activities:
Purchases of property and equipment		(13,508	)		(23,922	)
Capitalized software development costs for products to be sold		(1,446	)		(2,311	)
Purchases of investments		(78,222	)		(107,675	)
Proceeds from sale of investments		13,937			6,892
Proceeds from maturities of investments		149,699			97,187
Net cash provided by (used in) investing activities		70,460			(29,829	)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee option and stock    purchase plans		10,811			12,528
Payments on debt		(3,126	)		(3,125	)
Purchase and retirement of common stock under share repurchase plan		—			(64,999	)
Purchase and retirement of common stock for tax withholdings on vesting of employee    stock-based awards		(9,772	)		(11,769	)
Excess tax benefits from stock-based compensation expense		1,405			3,487
Net cash used in financing activities		(682	)		(63,878	)
Effect of exchange rate changes on cash and cash equivalents		(621	)		—
Net increase (decrease) in cash and cash equivalents		141,423			(30,559	)
Cash and cash equivalents, beginning of period		435,093			443,132
Cash and cash equivalents, end of period	$	576,516		$	412,573

POLYCOM, INC.

Selected Summary Data

(In millions except per share amounts and headcount)

(Unaudited)

	June 30, 2016		March 31, 2016		June 30, 2015
Balance Sheet Highlights
Cash and investments	$	722	$	713	$	660
Number of shares outstanding		136		136		133
Cash and investments per share	$	5.31	$	5.26	$	4.95
Debt	$	232	$	233	$	237
Operating cash flow - quarterly	$	19	$	53	$	33
Operating cash flow - trailing 12 months	$	129	$	142	$	188
DSO (Days Sales Outstanding)		49		51		46
Inventory turns - GAAP		5.2		5.1		5.2
Inventory turns - non-GAAP		5.1		5.1		5.2
Deferred revenue	$	257	$	263	$	260
Share repurchases:
Quarter-to-date share repurchases - shares		—		—		1.9
Quarter-to-date share repurchases - dollars	$	—	$	—	$	25
Year-to-date share repurchases - shares		—		—		4.8
Year-to-date share repurchases - dollars	$	—	$	—	$	65
Ending headcount		3,176		3,275		3,553

	For the Three Months Ended
	June 30, 2016			March 31, 2016			June 30, 2015
Income Statement Highlights
GAAP:
Revenues	$	288		$	290		$	317
Gross margin		56.0	%		56.5	%		58.7	%
Operating expenses	$	163		$	157		$	161
Operating margin		(0.5	)%		2.5	%		7.9	%
Diluted EPS	$	(0.07	)	$	0.02		$	0.14
Non-GAAP:
Revenues	$	288		$	290		$	317
Gross margin		57.4	%		57.2	%		59.2	%
Operating expenses	$	129		$	133		$	150
Operating margin		12.7	%		11.3	%		11.9	%
Diluted EPS	$	0.21		$	0.19		$	0.22

POLYCOM, INC.

Reconciliations of GAAP Measures to Non-GAAP Measures

(In thousands)

(Unaudited)

	Three Months Ended									Six Months Ended
	June 30, 2016			March 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015
GAAP cost of revenues used in inventory turns	$	126,507		$	126,246		$	130,650		$	252,753		$	268,530
Stock-based compensation expense		(3,506	)		(1,892	)		(1,382	)		(5,398	)		(3,645	)
Effect of stock-based compensation expense on warranty rates		(235	)		(106	)		(80	)		(341	)		(133	)
Amortization of purchased intangibles		(100	)		(100	)		(100	)		(200	)		(757	)
Non-GAAP cost of revenues used in inventory turns	$	122,666		$	124,148		$	129,088		$	246,814		$	263,995
GAAP gross profit	$	161,272		$	163,829		$	185,925		$	325,101		$	378,745
Stock-based compensation expense		3,506			1,892			1,382			5,398			3,645
Effect of stock-based compensation expense on warranty rates		235			106			80			341			133
Amortization of purchased intangibles		100			100			100			200			757
Non-GAAP gross profit	$	165,113		$	165,927		$	187,487		$	331,040		$	383,280
Non-GAAP gross margin		57.4	%		57.2	%		59.2	%		57.3	%		59.2	%
GAAP sales and marketing expense	$	82,505		$	79,463		$	89,433		$	161,968		$	180,292
Stock-based compensation expense		(7,550	)		(3,743	)		(2,698	)		(11,293	)		(5,311	)
Non-GAAP sales and marketing expense	$	74,955		$	75,720		$	86,735		$	150,675		$	174,981
Non-GAAP sales and marketing expense as  a percent of revenues		26.0	%		26.1	%		27.4	%		26.1	%		27.0	%
GAAP research and development expense	$	43,981		$	43,070		$	46,545		$	87,051		$	95,882
Stock-based compensation expense		(4,912	)		(2,029	)		(1,915	)		(6,941	)		(4,488	)
Non-GAAP research and development expense	$	39,069		$	41,041		$	44,630		$	80,110		$	91,394
Non-GAAP research and development expense as a percent of    revenues		13.6	%		14.1	%		14.1	%		13.9	%		14.1	%
GAAP general and administrative expense	$	20,291		$	20,110		$	22,269		$	40,401		$	43,436
Stock-based compensation expense		(5,638	)		(3,816	)		(3,716	)		(9,455	)		(5,499	)
Costs associated with CEO separation and related SEC    investigation		—			—			(64	)		—			(399	)
Non-GAAP general and administrative expense	$	14,653		$	16,294		$	18,489		$	30,946		$	37,538
Non-GAAP general and administrative expense as a percent of    revenues		5.1	%		5.6	%		5.8	%		5.4	%		5.8	%
GAAP total operating expenses	$	162,688		$	156,589		$	161,007		$	319,277		$	324,811
Stock-based compensation expense		(18,100	)		(9,588	)		(8,329	)		(27,689	)		(15,298	)
Amortization of purchased intangibles		(2,017	)		(2,200	)		(2,417	)		(4,217	)		(4,834	)
Restructuring costs		(6,007	)		(7,502	)		(343	)		(13,509	)		(367	)
Transaction-related costs		(7,887	)		(4,244	)		—			(12,131	)		—
Costs associated with CEO separation and related SEC    investigation		—			—			(64	)		—			(399	)
Non-GAAP total operating expenses	$	128,677		$	133,055		$	149,854		$	261,731		$	303,913
Non-GAAP total operating expenses as a percent of revenues		44.7	%		45.9	%		47.3	%		45.3	%		47.0	%
GAAP operating (loss) income	$	(1,416	)	$	7,240		$	24,918		$	5,824		$	53,934
Stock-based compensation expense		21,606			11,480			9,711			33,087			18,943
Effect of stock-based compensation expense on warranty rates		235			106			80			341			133
Amortization of purchased intangibles		2,117			2,300			2,517			4,417			5,591
Restructuring costs		6,007			7,502			343			13,509			367
Transaction-related costs		7,887			4,244			—			12,131			—
Costs associated with CEO separation and related SEC    investigation		—			—			64			—			399
Non-GAAP operating income	$	36,436		$	32,872		$	37,633		$	69,309		$	79,367
Non-GAAP operating margin		12.7	%		11.3	%		11.9	%		12.0	%		12.3	%

POLYCOM, INC.

Summary of Stock-Based Compensation Expense

(In thousands)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Cost of product revenues	$	1,133	$	505	$	1,914	$	1,460
Cost of service revenues		2,373		877		3,484		2,185
Stock-based compensation expense in total cost of revenues		3,506		1,382		5,398		3,645
Sales and marketing		7,550		2,698		11,293		5,311
Research and development		4,912		1,915		6,941		4,488
General and administrative		5,638		3,716		9,455		5,499
Stock-based compensation expense in operating expenses		18,100		8,329		27,689		15,298
Total stock-based compensation expense	$	21,606	$	9,711	$	33,087	$	18,943